At the outset of a sale, sellers are often tempted to accept the highest estate agent’s valuation they receive. However, there are sound reasons why they should avoid overpricing, as overpriced homes very often end up selling for less than they would had they been competitively priced to begin with.
Firstly, buyers buy by comparison. Why should they buy a house if it’s more expensive than a similar alternative? This simply doesn’t make sense and the property is unlikely to sell until such time as any competing homes have sold. By that time the house may well have suffered overexposure and be ‘going stale’ on the market.
Secondly, buyer activity is highest when the property is new on the market. If too high a price is discouraging buyers from viewing a house, early opportunities will have been missed and general interest will quickly wane. Competition between buyers is likely to drive up a sale price, whereas extended time on the market will drive it down.
Sellers often say, “But we can always take an offer!” The problem with this is that if fewer buyers look at a house, the chance of an offer being received is significantly reduced. The wrong price also attracts the wrong buyers, who are therefore unlikely to offer in any event. This is because buyers tend to purchase a property at the top of their price range; so the likely buyer pool is buyers looking in a lower price range, not a higher one. The right buyers must not be scared away!
Intense buyer activity in the early days of marketing is the key to achieving the highest price for a property – our job as estate agents is to help sellers to stimulate such activity, not least by encouraging competitive pricing.
So sellers are encouraged to be competitive by quoting the right price with the end result of securing the highest price. It works – it really does!